Next steps for Stan: A new stadium and the road to profitability

Stan Kroenke got a decent deal when the league approved his ownership bid for the St. Louis Rams yesterday. Already sitting on 40 percent of the team, Kroenke bought the remaining 60 percent for roughly $450 million, based on a franchise value of $750 million. I can't find what he bought his original stake in the franchise for, but you can bet it was at something less than the what the team is valued at now, even when you account for inflation (of which there hasn't been much since 1995) and the move from LA to STL. 

Just a day after Kroenke gained unanimous approval from the league's owners, Forbes magazine released their annual report on the valuation of all 32 NFL teams. Not surprisingly, the Rams sit close to the bottom, valued at an estimated $779 million, a long way from the league's most valuable franchise, the Dallas Cowboys, and their $1.8 billion net worth. Now that the Rams have an answer to their ownership question, let's look at the next steps for the Rams' most important part of the rebuilding process: getting back to profitability. 

As the report points out, the league, though still highly profitable, took a big hit in the midst of the recession that just won't go away. Television profits remain strong, with each team brining in $95.8 million, a $1.3 million increase, on broadcast deals and decent slice of pie from television deals from non-broadcast entities like Comcast and DriecTV. 

The most interesting part of the report isn't the franchise valuations or the revenue sharing, it's the glaring reminder that getting a new stadium deal will be priority number one for the Rams new owner, and his ability to get that done likely helped his bid get around the league's pesky rules about cross-ownership. (He has until 2014 to get his name off the book of his Denver sports franchises). 

The league's two most profitable teams, Dallas and Washington, have seen their books most positively impacted because of state-of-art facilities. Dallas sold out every game in their new stadium last season, and managed to pull in an extra $12 million in pure profits from non-NFL events at the stadium. Lessons of what a facility can do for a team are just as powerful in the Washington, DC area, where Dan Snyder made his bad judgement will personnel that much easier to swallow thanks to his savant's touch with the stadium. Check this out:

But Snyder saw opportunity where others did not and has been able to more than double nonbroadcasting revenue to $202 million since taking the helm by selling the stadium's naming rights to FedEx, increasing the building's capacity and maximizing premium seating opportunities.

Currently, the Rams lease the Dome, though I'm not sure about the exact arrangement, you can be sure it's not as profitable as owning your own stadium. And here's where we get to the intersection of facilities versus the product on the field. The Rams lost value over the last year thanks to lost local revenues, i.e. ticket sales. 

Right now, the Rams are working hard to field a better product. The team took a giant leap forward by drafting QB Sam Bradford with the first overall pick, no pressure or anything kid. Even though it's a still a step or two away from being a legit competitor, GM Billy Devaney and head coach Steve Spagnuolo seem to have the team on the right track. As the wins start coming, so should better ticket sales and all the other marketing opportunities that come with victory. 

With a popular product on the field, Kroenke's in much better shape to pursue a much more favorable stadium situation. The Rams' days in the Ed Jones Dome are numbered, and they'll be out just as soon as they hit that clause in their lease. Kroenke knows that the real value of a team is tied up in the value of the place they play. His Colorado teams, even in second tier pro sports like the NHL and the NBA, play in a building he owns, the Pepsi Center, and even the broadcast outlet for those teams.

The man understands synergy. And that's exactly what he'll be looking for as he attempts to put the Rams back on the road to respectability and, more importantly, profitability. 

So what about where the Rams will be playing after the wrangle out of their Ed Jones Dome lease? The answer is anywhere, anywhere they can get a favorable stadium deal. It's not a stretch to think that the City of St. Louis would find a way to work with Kroenke to get a new facility built inside the city limits, specifically favorable tax deals or even some kind of public/private partnership. If the city proper doesn't present favorable opportunities, Kroenke can always look to the sprawling lands outside the city limits; after all, he's made a lot of money on Wal-Mart anchored strip center developments that define suburban architecture and commerce.

The Rams can be a profitable team, but another question beyond that is how much money can be made off a stadium outside of what the NFL can offer.  There's far more competition for venues in a market like Los Angles than there is an market like St. Louis, which can realistically support only one football stadium. 

On the field and off, the Rams will be one of the more interesting team to watch over the next five years. Getting Stan Kroenke installed as the owner was merely the first step. 

Be sure to follow us on Twitter, where we'll be discussing this issue along with tonight's game all day. 

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